Clerkin et al v. Mylife.com Inc. et al
Filing
80
AMENDED ORDER re 79 GRANTING DEFENDANT GORALLS RULE 12(B)(2) 39 MOTION TO DISMISS, GRANTING IN PART AND DENYING IN PART DEFENDANTS RULE 12(B)(6) 42 MOTION TO DISMISS AND GRANTING IN PART PLAINTIFFS 47 MOTION TO APPOINT INTERIM CLASS COUNSEL. **CASE NO. CORRECTED ON PAGE 18 IS THE ONLY CHANGE (HIGHLIGHTED ON ORDER)**. ***CONSOLIDATING CASES C-11-2353-CW and C-11-3073-CW. ALL FUTURE FILING SHALL BE FILED IN THIS CASE C-11-527-CW*** Signed by Judge CLAUDIA WILKEN on 8/16/2011. (ndr, COURT STAFF) (Filed on 8/16/2011) Modified on 8/16/2011 (cp, COURT STAFF).
1
IN THE UNITED STATES DISTRICT COURT
2
FOR THE NORTHERN DISTRICT OF CALIFORNIA
3
4
5
JOHN CLERKIN and VERONICA MENDEZ,
individually and on behalf of all
others similarly situated,
6
7
8
9
United States District Court
For the Northern District of California
10
No. C 11-00527 CW
Plaintiffs,
v.
MYLIFE.COM, INC.; JEFFREY TINSLEY;
RACHEL GLASER; W. DWIGHT GORALL;
ARMEN AVEDISSIAN; MICHAEL SOH; SHARYN
ELES; and OAK INVESTMENT PARTNERS,
Defendants.
11
/
12
13
14
AMENDED ORDER
GRANTING
DEFENDANT
GORALL’S RULE
12(B)(2) MOTION
TO DISMISS,
GRANTING IN PART
AND DENYING IN
PART DEFENDANTS’
RULE 12(B)(6)
MOTION TO DISMISS
AND GRANTING IN
PART PLAINTIFFS’
MOTION TO APPOINT
INTERIM CLASS
COUNSEL
(Docket Nos. 39,
42 and 47)
15
16
Defendant W. Dwight Gorall moves to dismiss Plaintiffs John
17
Clerkin and Veronica Mendez’s claims against him for lack of
18
personal jurisdiction.
19
Jeffrey Tinsley; Rachel Glaser; Armen Avedissian; Michael Soh;
20
Sharyn Eles; and Oak Investment Partners move to dismiss
21
Plaintiffs’ action for failure to state a claim.
22
these motions and move to appoint their counsel as interim class
23
counsel.
24
Plaintiffs’ motion.
25
Having considered oral argument and the papers submitted by the
26
parties, the Court GRANTS Gorall’s Rule 12(b)(2) motion to dismiss,
27
GRANTS in part Defendants’ Rule 12(b)(6) motion to dismiss and
28
DENIES it in part and GRANTS in part Plaintiffs’ motion to appoint
Gorall and Defendants MyLife.com, Inc.;
Plaintiffs oppose
Non-parties Cynthia McCrary and Cody Brock oppose
The motions were heard on June 9, 2011.
1
their counsel as interim class counsel.
2
BACKGROUND
3
4
5
The following allegations are contained in Plaintiffs’
complaint.
MyLife.com, Inc., operates mylife.com, an Internet website.
6
MyLife presents those who sign up for its service with “a list of
7
fake names of people supposedly ‘searching for you.’”
8
To show that the website-generated lists are false, Plaintiffs
9
point to a testimonial posted on the Internet by an individual who
Compl. ¶ 1.
United States District Court
For the Northern District of California
10
registered on the website as “sfsf sdgfsdgs.”
11
website then returned a result, indicating that seven people were
12
looking for “sfsf sdgfsdgs.”
13
individual’s Internet testimonial stating that, irrespective of the
14
zip code entered, the website indicated that “Grovia Paxton” was
15
residing in that zip code area and was looking for the individual.
16
Id. at 3:11-17.
17
Id.
Id. at 3:4.
The
Plaintiffs cite another
In mid-2010, Clerkin began receiving emails from MyLife,
18
stating that people were searching for him on the website.
19
about September 25, 2010, Clerkin signed up for MyLife “at $21.95
20
for one month.”
21
realized “that no one he knew was looking for him.”
22
discovered that he had been charged $155.40.
23
full refund.
24
balance.
25
Compl. ¶ 7.
On or
After using the website, Clerkin
Id.
He then
Clerkin requested a
However, MyLife refunded only $104.55 and kept the
In early 2010, Mendez received an email from MyLife stating
26
that someone was searching for her.
27
discovered “that no one she knew was actually searching for her.”
28
2
Like Clerkin, she subsequently
1
Compl. ¶ 8.
2
was charged $60.00.
3
requested a refund, MyLife refused to return any money.
Mendez signed up for a $5.00 “trial subscription,” but
Id.
When she canceled the service and
4
The individual Defendants hold the following positions:
5
Tinsley is MyLife’s founder, chairperson and chief executive
6
officer; Glaser is MyLife’s chief operating and financial officer;
7
Gorall, a Florida resident, is MyLife’s Vice President of Emerging
8
Business; Avedissian is a MyLife employee who develops business
9
strategies; Soh is MyLife’s Senior Vice President for Marketing;
United States District Court
For the Northern District of California
10
and Eles is MyLife’s Vice President of Marketing Operations.
11
Glaser, Gorall, Avedissian, Soh and Eles “conspired with MyLife,
12
Mr. Tinsley, and others to perpetrate” the alleged fraudulent
13
scheme.
14
Compl. ¶¶ 11-15.
Oak Investment Partners, a venture capital firm, provided $25
15
million to MyLife.
16
and others to perpetrate” the alleged fraudulent scheme.
17
¶ 16.
18
It, too, “conspired with MyLife, Mr. Tinsley,
Compl.
Plaintiffs bring the following claims against Defendants:
19
(1) common count for money had and received; (2) violation of
20
California’s Consumer Legal Remedies Act (CLRA), Cal. Civ. Code
21
§§ 1750, et seq.; (3) violation of the fraud prong of California’s
22
Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200, et
23
seq.; (4) violation of the UCL’s unlawful prong; (5) violation of
24
the UCL’s unfair prong; and (6) unjust enrichment and common law
25
restitution.
26
Plaintiffs contend that the individual Defendants and Oak
27
Investment Partners should be held liable for MyLife’s conduct
28
3
1
because “each of them personally performed acts” giving rise to the
2
first through fifth causes of action.
3
89.
4
and conspired with MyLife and the other Defendants, and furnished
5
the means to accomplish the alleged misconduct, all of which also
6
supports liability against them.
7
superior liability against Tinsley, Glaser and Gorall for
8
Avedissian’s, Soh’s and Eles’s conduct.
9
contend that Tinsley and Glaser can be held personally liable for
Compl. ¶¶ 33, 47, 63, 76 and
Plaintiffs also argue that each Defendant aided and abetted
Plaintiffs seek respondeat
Finally, Plaintiffs
United States District Court
For the Northern District of California
10
the conduct of MyLife and other Defendants based on an agency
11
theory.
12
13
14
DISCUSSION
I.
Gorall’s Rule 12(b)(2) Motion to Dismiss
Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a
15
defendant may move to dismiss for lack of personal jurisdiction.
16
The plaintiff then bears the burden of demonstrating that the court
17
has jurisdiction.
18
F.3d 797, 800 (9th Cir. 2004).
19
demonstrate facts that if true would support jurisdiction over the
20
defendant.”
21
Uncontroverted allegations in the complaint must be taken as true.
22
AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir.
23
1996).
24
allegations if they are contradicted by affidavit.
25
v. Systems Technology Assocs., Inc., 557 F.2d 1280, 1284 (9th Cir.
26
1977).
27
conflicts in the evidence must be resolved in the plaintiff's
28
Schwarzenegger v. Fred Martin Motor Co., 374
The plaintiff “need only
Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995).
However, the court may not assume the truth of such
Data Disc, Inc.
If the plaintiff also submits admissible evidence,
4
1
2
favor.
AT&T, 94 F.3d at 588.
There are two independent limitations on a court’s power to
3
exercise personal jurisdiction over a non-resident defendant: the
4
applicable state personal jurisdiction rule and constitutional
5
principles of due process.
6
(9th Cir. 1990); Data Disc, Inc., 557 F.2d at 1286.
7
jurisdictional statute is co-extensive with federal due process
8
requirements; therefore, jurisdictional inquiries under state law
9
and federal due process standards merge into one analysis.
United States District Court
For the Northern District of California
10
11
Sher v. Johnson, 911 F.2d 1357, 1361
California’s
Rano v.
Sipa Press, Inc., 987 F.2d 580, 587 (9th Cir. 1993).
The exercise of jurisdiction over a non-resident defendant
12
violates the protections created by the due process clause unless
13
the defendant has “minimum contacts” with the forum state so that
14
the exercise of jurisdiction “does not offend traditional notions
15
of fair play and substantial justice.”
16
Washington, 326 U.S. 310, 316 (1945).
Int’l Shoe Co. v.
17
A.
18
General jurisdiction exists when a defendant maintains
19
“continuous and systematic” contacts with the forum state even if
20
the cause of action has no relation to those contacts.
21
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
22
414 (1984).
23
“fairly high.”
24
not count in the minimum contacts calculus.
25
Rudzewicz, 471 U.S. 462, 475 (1985).
26
evaluating the extent of contacts include whether the defendant
27
makes sales, solicits or engages in business, designates an agent
28
General Jurisdiction
The standard for establishing general jurisdiction is
Id.
Random, fortuitous or attenuated contacts do
5
Burger King v.
Factors considered in
1
for service of process, holds a license, or is incorporated in the
2
forum state.
3
F.3d 1082, 1086 (9th Cir. 2000).
4
Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223
Plaintiffs plead only that Gorall has aided and abetted
5
MyLife’s alleged misconduct and worked with other Defendants to
6
perpetrate the alleged fraud.
7
action taken by Gorall.
8
offer no factual background, are not sufficient to support general
9
jurisdiction over Gorall.
They do not allege any particular
Plaintiffs’ unadorned allegations, which
United States District Court
For the Northern District of California
10
B.
11
A court has specific jurisdiction over a defendant when the
Specific Jurisdiction
12
cause of action arises out of or relates to the defendant's
13
activities within the forum.
14
The “minimum contacts” required to assert specific jurisdiction are
15
analyzed using a three-prong test: (1) the non-resident defendant
16
must purposefully direct its activities towards, or consummate some
17
transaction with, the forum or a resident thereof, or perform some
18
act by which it purposefully avails itself of the privilege of
19
conducting activities in the forum, thereby invoking the benefits
20
and protections of its laws; (2) the claim must be one which arises
21
out of or results from the defendant’s forum-related activities;
22
and (3) the exercise of jurisdiction must be reasonable.
23
Lake, 817 F.2d 1416, 1421 (9th Cir. 1987).
24
conditions is required for asserting jurisdiction.
25
Am. v. Marina Salina Cruz, 649 F.2d 1266, 1270 (9th Cir. 1981).
26
Plaintiffs argue that Gorall purposefully directed his
Data Disc, Inc., 557 F.2d at 1286.
27
28
6
Lake v.
Each of these
Ins. Co. of N.
1
activities toward California residents.1
2
to demonstrate purposeful direction, the defendant must “allegedly
3
have (1) committed an intentional act, (2) expressly aimed at the
4
forum state, (3) causing harm that the defendant knows is likely to
5
be suffered in the forum state.”
6
(quoting Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th
7
Cir. 2002)).
8
9
For a defendant’s conduct
Schwarzenegger, 374 F.3d at 802
As noted above, Plaintiffs make only broad, general
allegations against Gorall.
Without more, the fiduciary shield
United States District Court
For the Northern District of California
10
doctrine applies to him.
11
association with a corporation that causes injury in the forum
12
state is not sufficient in itself to permit that forum to assert
13
jurisdiction over the person.”
Davis v. Metro Prods., Inc., 885
14
F.2d 515, 520 (9th Cir. 1989).
The doctrine is subject to two
15
exceptions: “(1) where the corporation is the agent or alter ego of
16
the individual defendant; or (2) by virtue of the individual’s
17
control of, and direct participation in the alleged activities.”
18
Wolf Designs, Inc. v. DHR & Co., 322 F. Supp. 2d 1065, 1072 (C.D.
19
Cal. 2004) (citations omitted).
20
MyLife is the alter ego of Gorall, and their averments do not
21
afford any insight into how Gorall controlled or directly
22
participated in the alleged fraudulent scheme.
Under this doctrine, “a person’s mere
Plaintiffs do not allege that
Plaintiffs’
23
1
24
25
26
27
28
In a heading, Plaintiffs contend that Gorall purposefully
availed himself of the privilege of conducting activities in
California. However, the purposeful availment analysis generally
pertains to contract claims. See Schwarzenegger, 374 F.3d at 802
(“A purposeful availment analysis is most often used in suits
sounding in contract. A purposeful direction analysis, on the
other hand, is most often used in suits sounding in tort.”).
Plaintiffs have not alleged that Gorall entered into a contract.
7
1
pleadings do not support specific jurisdiction over Gorall.
2
Accordingly, Plaintiffs’ claims against Gorall are dismissed
3
without leave to amend for lack of personal jurisdiction.
4
Plaintiffs seek to conduct jurisdictional discovery, they do not
5
justify their request and it is denied.
6
No. 498, United Food & Commercial Workers v. SDC Inv., Inc., 788
7
F.2d 535, 540 (9th Cir. 1986) (concluding that plaintiffs’ belief
8
that discovery will reveal additional contacts is not sufficient to
9
justify granting jurisdictional discovery).
Although
See Butcher’s Union Local
If, in the course of
United States District Court
For the Northern District of California
10
otherwise permissible discovery in this case, Plaintiffs learn of
11
information that would support specific personal jurisdiction over
12
Gorall, they may promptly move for leave to amend to add him as a
13
Defendant.
14
II.
15
Defendants’ Rule 12(b)(6) Motion to Dismiss
A complaint must contain a “short and plain statement of the
16
claim showing that the pleader is entitled to relief.”
17
Civ. P. 8(a).
18
claim is appropriate only when the complaint does not give the
19
defendant fair notice of a legally cognizable claim and the grounds
20
on which it rests.
21
(2007).
22
state a claim, the court will take all material allegations as true
23
and construe them in the light most favorable to the plaintiff.
24
Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).
25
However, this principle is inapplicable to legal conclusions;
26
“threadbare recitals of the elements of a cause of action,
27
supported by mere conclusory statements,” are not taken as true.
28
Fed. R.
Dismissal under Rule 12(b)(6) for failure to state a
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
In considering whether the complaint is sufficient to
8
NL
1
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009) (citing Twombly,
2
550 U.S. at 555).
3
When granting a motion to dismiss, the court is generally
4
required to grant the plaintiff leave to amend, even if no request
5
to amend the pleading was made, unless amendment would be futile.
6
Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911
7
F.2d 242, 246-47 (9th Cir. 1990).
8
would be futile, the court examines whether the complaint could be
9
amended to cure the defect requiring dismissal “without
In determining whether amendment
United States District Court
For the Northern District of California
10
contradicting any of the allegations of [the] original complaint.”
11
Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990).
12
Leave to amend should be liberally granted, but an amended
13
complaint cannot allege facts inconsistent with the challenged
14
pleading.
15
A.
Id. at 296-97.
Plaintiffs’ Claims Against the Individual Defendants and
Oak Investment Partners
16
Plaintiffs base their claims against the individual Defendants
17
and Oak Investment Partners on allegations that these Defendants
18
performed acts that facilitated MyLife’s alleged misconduct,
19
conspired with each other to advance the challenged scheme and
20
“furnished the means” to accomplish any alleged wrongdoing.
21
Further, Plaintiffs seek to hold Tinsley, Glaser and Gorall on
22
respondeat superior grounds, asserting that they authorized and
23
directed their subordinates to engage in misconduct.
24
These general allegations are not sufficient to state claims
25
against the individual Defendants or Oak Investment Partners.
26
Plaintiffs’ complaint does not explain what these Defendants did to
27
28
9
1
participate in the alleged scheme.
2
Plaintiffs allege that these Defendants personally performed acts,
3
they do not identify any particular conduct.2
4
sufficient “if it tenders ‘naked assertion[s]’ devoid of ‘further
5
factual enhancement.’”
6
U.S. at 557).
7
For instance, although
A complaint is not
129 S. Ct. at 1949 (quoting Twombly, 550
Accordingly, Plaintiffs’ claims against the individual
8
Defendants and Oak Investment Partners are dismissed.
9
are granted leave to amend to allege the acts each Defendant
United States District Court
For the Northern District of California
10
Plaintiffs
performed to advance the alleged fraudulent scheme.
11
B.
12
The CLRA imposes liability for “unfair methods of competition
13
and unfair or deceptive acts or practices undertaken by any person
14
in a transaction intended to result or which results in the sale or
15
lease of goods or services to any consumer.”
16
§ 1770(a).
17
Plaintiffs’ CLRA Claim Against MyLife
Cal. Civ. Code
Plaintiffs acknowledge that their CLRA claim is based on fraud
18
and that they must satisfy the heightened pleading requirements of
19
Federal Rule of Civil Procedure 9.
20
mistake, the circumstances constituting fraud or mistake shall be
21
stated with particularity.”
22
allegations must be “specific enough to give defendants notice of
23
the particular misconduct which is alleged to constitute the fraud
24
charged so that they can defend against the charge and not just
25
deny that they have done anything wrong.”
“In all averments of fraud or
Fed. R. Civ. Proc. 9(b).
The
Semegen v. Weidner, 780
26
2
27
28
Indeed, it is not clear how Oak Investment Partners, an
entity, could “personally perform” an action.
10
1
F.2d 727, 731 (9th Cir. 1985).
2
nature of the alleged fraudulent activities are sufficient, id. at
3
735, provided the plaintiff sets forth “what is false or misleading
4
about a statement, and why it is false.”
5
Secs. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994).
6
averred generally, simply by saying that it existed.
7
see Fed. R. Civ. Proc. 9(b) (“Malice, intent, knowledge, and other
8
condition of mind of a person may be averred generally.”).
9
Statements of the time, place and
In re GlenFed, Inc.,
Scienter may be
Id. at 1547;
Plaintiffs contend that their CLRA claim has two bases:
United States District Court
For the Northern District of California
10
(1) MyLife’s representations in its email solicitations to
11
Plaintiffs that “someone” was looking for them and (2) MyLife’s
12
billing practices.
13
1.
14
The Court considers each in turn.
Email Solicitations
The gravamen of Plaintiffs’ complaint about MyLife’s email
15
solicitations is that the emails represented that someone was
16
searching for Plaintiffs, even though no one was.
17
purportedly received such emails in early to mid-2010.
18
that the website produces “a list of fake names” for those who sign
19
up.
20
the Internet recounting tests of the mylife.com website suggesting
21
that these names are fake.
Plaintiffs
They plead
As noted above, Plaintiffs cite several testimonials posted on
22
Plaintiffs’ allegations, which must be taken as true, satisfy
23
their pleading burden under Rule 9 and, if proved, could show that
24
MyLife violated the CLRA.3
Their allegations suggest that MyLife’s
25
3
26
27
28
Specifically, MyLife’s alleged actions could be found to
fall within the following categories of conduct proscribed the
CLRA,
11
1
statement that people were looking for them was false or deceptive.
2
Defendants argue that Plaintiffs’ inability to recognize the names
3
of the people looking for them does not demonstrate that its emails
4
were false or deceptive.
5
plead that the names of the people purportedly looking for them are
6
fictitious and they allege a sufficient factual basis to support
7
this assertion.
8
9
This is beside the point.
Plaintiffs
Defendants contend that Plaintiffs have failed to plead any
damage based on the alleged misrepresentations.
This is incorrect.
United States District Court
For the Northern District of California
10
Plaintiffs allege that, based on MyLife’s refusal to offer a full
11
refund, Clerkin effectively paid $50.85.
12
any portion of the $60.00 Mendez paid.
13
reflect Plaintiffs’ damages.
14
not plead that they did not receive value from their use of the
15
site.
16
website presented lists of fake names and provided information “of
17
no conceivable value to anyone.”
18
they did not receive value from their subscriptions.
19
MyLife declined to refund
These alleged amounts
Defendants contend that Plaintiffs do
This argument is also unavailing.
Plaintiffs aver that the
Compl. ¶ 1.
This suggests that
Accordingly, Defendants’ motion to dismiss Plaintiffs’ CLRA
20
claim against MyLife, to the extent it is based on the email
21
solicitations, must be denied.
22
23
24
25
26
27
28
(3) Misrepresenting the affiliation, connection, or
association with . . . another. . . .
(5) Representing that . . . services have . . . uses
[and] benefits . . . which they do not have . . . .
(9) Advertising . . . services with intent not to sell
them as advertised.
Cal. Civ. Code § 1770.
12
1
2.
2
Billing Practices
Plaintiffs contend that MyLife’s billing practices violated
3
the CLRA.
4
$21.95 for one month” but was billed $155.40.
5
also allege that Mendez signed up for a “trial subscription . . .
6
for $5.00” but was charged $60.00.
7
most favorable to Plaintiffs, these allegations state a CLRA claim.
8
The averments suggest that, based on MyLife’s representations,
9
Plaintiffs signed up for a particular subscription, but that MyLife
United States District Court
For the Northern District of California
10
Id. ¶ 8.
Compl. ¶ 7.
They
Viewed in the light
billed for another.
11
12
They allege that Clerkin signed up for services “at
Accordingly, Plaintiffs’ CLRA claim against MyLife will not be
dismissed in any respect.
13
C.
14
California’s UCL prohibits any “unlawful, unfair or fraudulent
Plaintiffs’ UCL Claims Against MyLife
15
business act or practice.”
16
UCL incorporates other laws and treats violations of those laws as
17
unlawful business practices independently actionable under state
18
law.
19
(9th Cir. 2000).
20
law may serve as the basis for a UCL claim.
Saunders v. Superior
21
Court, 27 Cal. App. 4th 832, 838-39 (1994).
In addition, a
22
business practice may be “unfair or fraudulent in violation of the
23
UCL even if the practice does not violate any law.”
24
Scripps Health, 30 Cal. 4th 798, 827 (2003).
Cal. Bus. & Prof. Code § 17200.
The
Chabner v. United Omaha Life Ins. Co., 225 F.3d 1042, 1048
Violation of almost any federal, state or local
Olszewski v.
25
To assert standing under the UCL, plaintiffs must allege that
26
they “suffered an injury in fact” and “lost money or property as a
27
result of the unfair competition.”
28
13
Cal. Bus. & Prof. Code § 17204.
1
The purpose of section 17204 is to “eliminate standing for those
2
who have not engaged in any business dealings with would-be
3
defendants.”
4
(2011).
Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 317
5
Plaintiffs’ allegations support standing under the UCL.
6
plead facts suggesting that MyLife deceived them through its email
7
solicitations and representations about its billing practices and
8
that they lost money as a result.
9
supporting their CLRA claim against MyLife likewise support their
Further, Plaintiffs’ allegations
10
United States District Court
For the Northern District of California
They
claims against MyLife under the UCL’s unlawful and fraudulent
11
prongs.
12
their claim against MyLife under the UCL’s unfair prong.
Below, the Court considers whether Plaintiffs have stated
13
In Cel-Tech Communications, Inc. v. Los Angeles Cellular
14
Telephone Company, 20 Cal. 4th 163 (1999), the California Supreme
15
Court enunciated the elements of a UCL claim brought by competitors
16
under the UCL’s unfair prong.
17
appeal have reached varying conclusions as to the elements
18
consumers must plead and prove to prevail under the UCL’s unfair
19
prong.
20
718, 735-736 (9th Cir. 2007); Drum v. San Fernando Valley Bar
21
Ass’n, 182 Cal. App. 4th 247, 256 (2010).
22
used.
23
must allege a “violation or incipient violation of any statutory or
24
regulatory provision, or any significant harm to competition.”
25
Under the second test, a consumer is required to plead that a
26
defendant’s conduct “is immoral, unethical, oppressive,
27
unscrupulous or substantially injurious to consumers” and
28
Since then, California courts of
See, e.g., Lozano v. AT&T Wireless Servs., Inc., 504 F.3d
Drum, 182 Cal. App. 4th at 256.
14
Three tests have been
Under one test, a consumer
Id.
1
demonstrate how “the utility of the defendant’s conduct” is not
2
outweighed by “the gravity of the harm to the alleged victim.”
3
(citation and internal quotation marks omitted).
4
which is based on the Federal Trade Commission’s definition of
5
unfair business practices, requires that “(1) the consumer injury
6
must be substantial; (2) the injury must not be outweighed by any
7
countervailing benefits to consumers or competition; and (3) it
8
must be an injury that consumers themselves could not reasonably
9
have avoided.”
United States District Court
For the Northern District of California
10
11
Id.
The third test,
Id. at 257 (citation and internal quotation marks
omitted).
Under any of these tests, Plaintiffs allege sufficient facts
12
to support their claim against MyLife under the UCL’s unfair prong.
13
Defendants do not dispute that, if Plaintiffs are able to state a
14
CLRA claim, they satisfy the first test stated above.
15
allegations also satisfy the second test because they have alleged
16
misconduct without utility that outweighs injury to consumers.
17
Finally, Plaintiffs allege facts indicating that they have lost
18
money based on MyLife’s alleged misconduct, that they did not
19
benefit from this alleged misconduct and that, based on MyLife’s
20
purported deception, they could not reasonably have avoided the
21
injury.
22
23
24
Plaintiffs’
Accordingly, Plaintiffs’ claims against MyLife under the
unlawful, unfair and fraud prongs of the UCL are cognizable.
D.
Plaintiffs’ Claim Against MyLife for Money Had and
Received
25
A claim under the common count for money had and received is
26
stated if it is alleged that “the defendant is indebted to the
27
28
15
1
plaintiff in a certain sum for money had and received by the
2
defendant for the use of the plaintiff.”
3
Cal. App. 4th 1611, 1623 (1994) (citation and internal quotation
4
marks omitted).
5
viability of Plaintiffs’ other claims.
6
stated CLRA and UCL claims based on MyLife’s alleged email
7
solicitations, their common count against MyLife for money had and
8
received is cognizable.
9
United States District Court
For the Northern District of California
10
E.
Schultz v. Harney, 27
Defendants contend that this claim rests on the
Because Plaintiffs have
Unjust Enrichment and Restitution
California courts appear to be split as to whether there is an
11
independent cause of action for unjust enrichment.
12
Hewlett-Packard Co., 582 F. Supp. 2d 1261, 1270-71 (C.D. Cal. 2007)
13
(applying California law).
14
not a cause of action, or even a remedy, but rather a general
15
principle, underlying various legal doctrines and remedies.
16
McBride v. Boughton, 123 Cal. App. 4th 379, 387 (2004).
17
McBride, the court construed a “purported” unjust enrichment claim
18
as a cause of action seeking restitution.
19
two potential bases for a cause of action seeking restitution:
20
(1) an alternative to breach of contract damages when the parties
21
had a contract which was procured by fraud or is unenforceable for
22
some reason; and (2) where the defendant obtained a benefit from
23
the plaintiff by fraud, duress, conversion, or similar conduct and
24
the plaintiff chooses not to sue in tort but to seek restitution on
25
a quasi-contract theory.
26
implies a contract, or quasi-contract, without regard to the
27
parties’ intent, to avoid unjust enrichment.
28
Baggett v.
One view is that unjust enrichment is
Id. at 388.
16
Id.
In
There are at least
In the latter case, the law
Id.
1
Another view is that a cause of action for unjust enrichment
2
exists and its elements are receipt of a benefit and unjust
3
retention of the benefit at the expense of another.
4
SeoulBank, 77 Cal. App. 4th 723, 726 (2000); First Nationwide Sav.
5
v. Perry, 11 Cal. App. 4th 1657, 1662-63 (1992).
6
Lectrodryer v.
Even under McBride’s more stringent view, Plaintiffs state an
7
unjust enrichment claim.
8
adequately that MyLife obtained money from them based on deceptive
9
email soliciations.
As already explained, they have alleged
Thus, Plaintiffs’ unjust enrichment claim
United States District Court
For the Northern District of California
10
against MyLife is cognizable.
11
III. Plaintiffs’ Motion to Appoint Their Counsel as Interim Lead
Counsel
12
Federal Rule of Civil Procedure 23(g)(3) permits a court to
13
“designate interim counsel to act on behalf of a putative class
14
before determining whether to certify the action as a class
15
action.”
Plaintiffs ask the Court to appoint their counsel, Bursor
16
& Fisher P.A., as interim lead class counsel.
As noted above,
17
McCrary and Brock, who are not parties to this action, oppose
18
Plaintiffs’ motion.
They ask the Court to deny Plaintiffs’ motion
19
as premature or, in the alternative, to appoint their counsel as
20
interim co-lead class counsel.
McCrary is the plaintiff in McCrary
21
v. MyLife.com, Inc., Case No. C 11-2353 CW (N.D. Cal.), and Brock
22
is the plaintiff in Brock v. MyLife.com, Inc., Case No. C 11-3073
23
CW (N.D. Cal.).
24
Plaintiffs’ action will go forward.
Having considered the
25
parties’ submissions, the Court appoints Plaintiffs’ counsel and
26
McCrary and Brock’s counsel as co-interim class counsel.
27
28
17
1
2
CONCLUSION
For the foregoing reasons, the Court GRANTS without prejudice
Gorall’s Rule 12(b)(2) motion to dismiss for lack of personal
4
jurisdiction (Docket No. 39), GRANTS in part Defendants’ Rule
5
12(b)(6) motion to dismiss and DENIES it in part (Docket No. 42)
6
and GRANTS in part Plaintiffs’ motion to appoint their counsel as
7
interim class counsel (Docket No. 47).
8
otherwise permissible discovery in this case, Plaintiffs learn of
9
information that would support specific personal jurisdiction over
10
United States District Court
For the Northern District of California
3
Gorall, they may promptly move for leave to amend to add him as a
11
Defendant.
12
and Oak Investment Partners are dismissed for failure to state a
13
claim.
14
supporting personal liability against these Defendants.
15
Defendants’ Rule 12(b)(6) motion to dismiss is denied in all other
16
respects.
17
If, in the course of
Plaintiffs’ claims against the individual Defendants
Plaintiffs are granted leave to amend to plead facts
This case, along with McCrary and Brock, shall proceed as a
18
consolidated action.
19
0527 case, the lowest numbered of the three lawsuits.
20
shall close the files on the 11-2353 and 11-3073 cases.
21
All future filings shall be filed in the 11The Clerk
Defendants MyLife.com and Oak Investment Partners’ motions
22
concerning Plaintiffs’ Consolidated Amended Class Action complaint
23
are set to be heard on September 1, 2011 at 2:00 p.m.
24
25
IT IS SO ORDERED.
Dated:
8/16/2011
CLAUDIA WILKEN
United States District Judge
26
27
28
18
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